The Decoy Effect: How Irrelevant Choices Influence Our Decisions

3 January 2026

Have you ever been stuck choosing between two options, only to suddenly favor one when a third, seemingly unnecessary choice appears? That's the Decoy Effect in action. Marketers, businesses, and even politicians use it all the time to sway our decisions without us even realizing it. But why does this happen? And how can understanding this psychological trick help us make better choices?

Let's dive deep into the fascinating world of decision-making and uncover the hidden forces shaping our choices.

What Is the Decoy Effect?

The Decoy Effect, also known as the asymmetric dominance effect, is a cognitive bias where the introduction of an irrelevant alternative influences our decision-making.

Imagine you're at a movie theater deciding between two popcorn sizes:

- Small popcorn – $5
- Large popcorn – $10

You might hesitate. The large seems expensive, but the small might not be enough. Now, the theater introduces a third option:

- Medium popcorn – $9

Suddenly, the large popcorn looks like a much better deal. That sneaky medium option? It’s the decoy. Its purpose isn't to be chosen but to make the large popcorn seem like a steal in comparison.

The Psychology Behind It

Our brains love making comparisons. When we're faced with two options, choosing can be tough. But when a third, slightly inferior option is introduced, our decision feels easier—and often, we end up picking the most expensive or profitable choice for the seller.

This happens because of relativity in decision-making. The decoy is purposefully designed to be asymmetrically dominated, meaning it's worse than one option but not necessarily the other. This tricks our brain into thinking we are making a rational choice when, in reality, we are being nudged toward a specific decision.

Real-World Examples of the Decoy Effect

The Decoy Effect isn’t just some fancy psychological theory—it’s everywhere. From your favorite coffee shop to online subscriptions, businesses use it all the time. Let’s look at some common examples.

1. Subscription Plans

Ever noticed how streaming services (like Netflix, Spotify, and online magazines) structure their pricing?

- Basic Plan – $8/month (limited features)
- Standard Plan – $12/month (HD, watch on two screens)
- Premium Plan – $15/month (4K, watch on four screens)

That Standard Plan is the decoy. It makes the Premium Plan look like a much better deal by comparison. If the Basic and Premium plans were presented alone, you might have considered the cheaper option. But with the decoy in play, you feel like upgrading is the smarter choice.

2. Fast Food Combos

Fast-food restaurants use the Decoy Effect all the time. Say there are three burger combo options:

- Small meal – $6
- Medium meal – $9
- Large meal – $10

That medium meal exists solely to push you toward the large. After all, why pay $9 for a medium when you can get the large for just one more dollar?

3. Tech Gadgets

Ever wondered why smartphones or laptops come in three variations?

- Basic Model – $699 (low storage, outdated processor)
- Mid-Tier Model – $899 (better storage, faster processor)
- High-End Model – $999 (best features, high storage, best processor)

That mid-tier model is a decoy—for just $100 more, you get way more value by choosing the high-end version.

Why Do We Fall for the Decoy Effect?

So why do we keep falling for this trick, even when we know about it? Several psychological reasons explain our vulnerability:

1. We Seek the "Better Deal"

Humans love deals. Even if we end up spending more, if it feels like a better value, we convince ourselves it’s the right choice.

2. Fear of Missing Out (FOMO)

Nobody wants to feel like they got the short end of the stick. The decoy makes the target option seem like the smartest decision, and we fear losing out if we don’t choose it.

3. Cognitive Ease

Making choices is exhausting. The Decoy Effect simplifies decisions by making one option seem like the obvious winner. Our brain, always looking for shortcuts, happily takes the bait.

Can the Decoy Effect Be Used for Good?

Not all uses of the Decoy Effect are bad. Sometimes, it can actually help guide better decisions.

- Encouraging healthy choices – Restaurants might price a healthy meal attractively by adding a decoy that makes the unhealthy meal seem less valuable.
- Boosting charitable donations – Nonprofits may structure donation tiers so that a slightly higher amount appears more reasonable, encouraging people to give more.
- Sustainable product choices – Environmentally friendly products might seem pricey, but with a decoy between them and a cheaper but less sustainable option, more consumers might make the eco-friendly choice.

How to Avoid Falling for the Decoy Effect

Now that we know how it works, how can we resist its influence?

1. Take a Step Back

Before making a decision, ask yourself: “Would I still make this choice if the third option didn’t exist?” If the answer is no, you might be falling for the decoy.

2. Focus on Your Needs, Not the Comparison

Marketers exploit our tendency to compare. Instead of looking at the options side by side, think about what you actually need. Do you really need that premium subscription, or is the basic plan good enough?

3. Set a Budget Before Shopping

Decoys work by convincing you to spend more than you originally planned. Setting a strict budget before shopping can help you avoid unnecessary upgrades.

4. Recognize the Trick in Action

Being aware of the Decoy Effect is half the battle. The next time you see three product tiers or pricing plans, take a moment to identify if one of them is a decoy.

Final Thoughts

The Decoy Effect is a subtle but incredibly powerful psychological trick that influences our choices daily. Whether it’s picking a meal, choosing a phone plan, or subscribing to a service, businesses use this strategy to nudge us toward spending more.

But now you’re armed with knowledge. By recognizing this trick, you can take control of your decisions, ensuring that your choices align with what’s actually best for you—not what a business wants you to choose.

Next time you’re faced with multiple options, take a second look. That third, seemingly useless option might just be there to manipulate your decision. Stay sharp!